With the big spending getting kicked off this Friday (Black Friday) and the fact that we are headlong into a recession, there is a lot of advice flying around about how to cut back expenses this holiday season. It seems that everywhere I turn people are talking about how tight everything is and how there just doesn’t seem to be enough to live comfortably like we all were over the past 5 or so years. Now let me preface what I am going to say next with the disclaimer that I am not a fan of bad debt, especially to buy stuff you really don’t need or that isn’t going to cause someone to stop loving you because you didn’t get it for them.
Now on to my point. I think the people who have been spewing advice on how to cut corners this holiday season and how to pinch pennies have actually been talking non-stop for the past decade on this subject and don’t actually seem to be making any real change in anyone’s life for the better. The reason is that cutting spending and reducing expenses is the evil little cousin to making money or accomplishing capital accumulation as my buddy Todd likes to say. It is a slippery slope that many will get you on by convincing you that by reducing your expenses, lowering your overhead and cutting back will actually make you wealthier in the long run. It just isn’t so.
Making money is a totally different skill and takes a completely different focus than cutting back and reducing expenses. It doesn’t matter how much you saved by NOT paying interest on your credit cards or how much you saved by NOT buying that Xbox 360, it is not the same as making more money and depositing it into your bank account. The logic goes something like this… if I pay extra on my mortgage, I’ll pay it off faster. By paying it off faster, I’ll pay less interest expense to own my home. By paying less interest, it’s like making that much because I would have had to pay it and now I don’t. The problem is, let’s say you pay off your mortgage early and you save from paying $150,000 in interest. If it’s like making $150,000 since you didn’t have to pay it, where is the $150,000 you claim to have made? It’s not in your bank account like it would be if you really did make $150,000.
So what does all of this have to do with holiday spending? It’s a long way to say that instead of focusing on what you can’t buy, think about how to make more money in the next few weeks to afford buying what you really want and not have this overhanging guilt that you bought something you couldn’t afford and that you should just be grateful for what you have and that living within your means is meant to reduce your expenses, not increase your income.
So what can you do to get extra income in the next few weeks? A brilliant book I read a few months ago by Loral Langemeier goes over this. It’s called ‘Creating A Cash Machine For Life’ and walks you step by step down the path of creating more income with skills you already have and getting cashflow in 7 weeks or less, sometimes even as fast as 7 days! Loral understands the reality that cutting expenses is not the way to wealth and actually has a whole series of books focused on creating wealth and increasing income, because when this happens, expenses get covered and you have extra to stash away for your long term needs.
Even without the book you can come up with a handful of ideas to generate a few hundred to even a few thousand dollars to cover those mad rushes in the stores to fulfill your family’s every demand. So start asking yourself ‘how can I make an extra $250 this weekend that would be fun for me to do?’ instead of convincing yourself to not spend and enforce massive amounts of self discipline to boot.
